One of the major concerns the technology industry had with the Aereo case while it worked its way through the courts was its possible impact on cloud computing. As I discussed in a blog post on last year’s Supreme Court decision, both the majority and the dissent provided clear signals that a cloud provider would not be directly liable for infringing content uploaded by a user. Now a district court in New York has held explicitly what the Supreme Court in Aereo held implicitly: a cloud provider is not directly liable for its subscriber’s infringing conduct. Moreover, relying on the Supreme Court’s Sony-Betamax decision, the district court also found that a cloud provider is not contributorily liable for its subscriber’s infringing conduct.
In Aereo, several of the amicus briefs, including the one I filed on behalf of the Center for Democracy and Technology, and those filed by CCIA and law professors David Post and James Grimmelmann, stated that the starting point of any copyright analysis was identifying who was the volitional actor—who was the party that would be treated as the direct infringer, as opposed to a secondary infringer. Although the majority opinion, written by Justice Breyer, did not use the word “volition,” the way it framed its decision indicated that it believed that Aereo was the volitional actor. Justice Scalia’s dissent, by contrast, explicitly found that identification of the volitional actor was the first step of a proper copyright analysis. Justice Scalia further opined that the subscribers were the volitional actors because “subscribers call all the shots: Aereo’s automated system does not relay any program, copyrighted or not, until a subscriber selects a program and tells Aereo to relay it.” While the majority and the dissent disagreed on whether Aereo was the volitional actor, they appeared to agree that a cloud storage provider would not be the volitional actor.
Judge Carter in the Southern District of New York has now specifically reached that conclusion in Smith v. BarnesandNoble.com. The facts of the case are somewhat convoluted. Louis Smith wrote an ebook that he made available to the public through an ebook distributor, Smashwords. Pursuant to its agreement with Smith, Smashwords made his book available for sale and free samples on its website as well as the websites of its retail partners, including BarnesandNoble.com (B&N). B&N used a cloud-based digital locker system. In 2010, for the first and only time, a B&N customer acquired a free sample of Smith’s book (consisting of 5% of the book), which was saved in the customer’s digital locker.MORE »